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Murali Gopalan
Mumbai, Dec 21: Arthur D Little, Arthur Andersen and Boston Consulting Group are among five international consultants shortlisted by Mangalore Refinery & Petrochemicals (MRPL) for an exercise in setting up an exclusive marketing network.
MRPL is a 26:26 joint venture between Hindustan Petroleum Corporation (HPCL) and Indian Rayon & Industries of the AV Birla group. The products of its three-million-tonne refinery are at present being vended through HPCL's 4,500-and-odd retail outlets all over the country.
"We are exploring options of having our own marketing network and that is the reason why we are seeking counsel from top names in the world business," sources said. According to them, it was "rather premature" at this stage to say if MRPL had made up its mind on a separate marketing infrastructure.
"As things stand, we are happy with the present arrangement, though in the long run, MRPL will be keen on creating its own base to supplement the effort," sources said. The company is also expanding itscapacity to nine million tonnes by the first half of 1999 and is looking to a wider canvas for marketing its products.
According to sources, the choice of consultant will be made during the next few months and it is difficult to say which candidate fits the bill in assisting MRPL. Andersen is already working with partner, HPCL, on a separate recast programme. Arthur D Little, it may be recalled, had prepared a detailed study of the domestic oil industry way back in 1993 where the focus was on the downstream sector.
The study, believed to be one of the best-ever efforts by an international consultant, was of the view that the Indian Oil Corporation's (IOC) overwhelming market share of 55 per cent had to be pruned to safeguard the interests of other public-sector units. Arthur D Little had recommended a merger of Madras Refineries with Cochin Refineries while offering them marketing rights of IOC.
MRPL's decision to get into marketing will also to a large extent be determined by the decision to rope in athird "strategic" partner. Sources said talks had been held with big names in the world oil business though a decision would be slow in coming.
"A strategic partner will certainly help but it is a process that will take time. We need to work out several issues pertaining to the equity stake that can be offered and assure ourselves that this will be in the best interests of the joint venture," sources said.
They were also categoric that the partner in question will hold less than 26 per cent so that the present arrangement between HPCL and Indian Rayon stands unaltered. Creation of a marketing base is a time consuming and expensive process and MRPL will go slow initially. Experts are also of the view that the company will identify pockets in the south for its retail outlets because that is where products will be largely supplied.
"It is in marketing where the real money lies and MRPL is right in thinking on these lines. Even companies like the Oil and Natural Gas Corporation, keen on getting a footholdin refining, have their eyes on marketing which is the more remunerative option," observers say.
MRPL is also close to finalising its 26 per cent stake in the Mangalore-Bangalore pipeline promoted by HPCL and Petronet India. The Rs 707-crore project is expected to be commissioned by the end of 2001 and MRPL's equity outgo will be around Rs 45 crore. The pipeline will carry products from the refinery to eventually cater to regions in Andhra Pradesh and Karnataka.
Arthur Anderson to advise on crude imports
MRPL has roped in Arthur Andersen for counsel in importing crude on its own for the future. At present, IOC caters to this task but MRPL has already made it known that it will take over during the next few months. Though details of Andersen's mandate are not known, sources say that the consultant will look at various aspects like the grade of crude that would be appropriate for MRPL's operations as also the infrastructure required for this task and other vital details. The exercise has alreadybegun and if things go according to plan, MRPL will kick off imports on its own from April 1999.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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